4.40 A well-known insurance company offers a policy known as the “Estate Creator Six Pay.”

Typically the policy is bought by a parent or grandparent for a child at the child’s birth.

The details of the policy are as follows: The purchaser (say, the parent) makes the following six payments to the insurance company.
First birthday $750 Fourth birthday $800 Second birthday $750 Fifth birthday $800 Third birthday $750 Sixth birthday $800 No more payments are made after the child’s sixth birthday. When the child reaches age 65, he or she receives $250,000. If the relevant interest rate is 6 percent for the first six years and 7 percent for all subsequent years, is the policy worth buying?